Social and Cultural Forces

Society and culture plays an important role in determining the marketing plan and business
strategy of the organization. Though Unilever, Tapal are big names and enjoy a very good
market share but still these forces sometimes play a major impact. Recently when Muslims
planned to resist against the foreign made goods it could have greatly affected the sales of
Supreme & Lipton Yellow Label but at the same time this situation could have been good for
Tapal. These forces not always play a negative role but can sometimes be really helpful.
Tetley entering this market as a new product can also be effected by these social and
cultural forces. In Asia society and culture does make an impact. Following Factors
contribute in social trends.
Tea is taken as traditional drink
Hi-Tea parties in Hotels
Offices
Institutions
Average consumption of Soft Drinks in U.S. is 365 bottles / anum
Pakistan 20 bottles/ anum

Political and Legal Forces

The tea market is very much dependant on Political & Legal forces. In other words we can
say that Political & Legal forces can dictate the sales and profitability of the Tea selling
firms. Taxes and Excise duty are of real importance to these organizations. The price of the
tea is to great extent dependent on taxes. On the other hand there are several other
requirements that the Tea selling firms need to fulfill. For new entrant specially Tetley there
would me many Political and legal barriers
Political Factors:
Govt. Policies
Import Taxes reduced up to 10% which reduces the share of smuggled tea.
Prices are reduced increasing branded tea market.
15% GST is an hurdle for end consumer
Govt. encouraged private sector to grow local tea at Shinkiari Tea gardens.

Technological Forces
As far as Tea is concerned the Technological forces that may apply are good machinery for
refining and packaging. Tapal is considered to be the pioneer in soft packing. Unilever is
also up to the task as far as packaging goes. Unilever and in my opinion Tetley will always
have an upper hand and would be able to sustain the pressure of bringing in new
technological changes as they are financially strong and have employees who love
technological changes on the other hand Tapal may initially cope up with these foreign firms
but in long run it wont be able to make constant technological changes. Some of the
Technological Turns taken by the industry are as follows
Advent of new Blending & Packaging Machines has increased the efficiency.( Dilatometers
& Q.C. Machines)
Use of Digital Scales for Quality Blending
Use of Palm tops in monitoring primary and secondary sales management and trend
analysis

Economic Conditions
Being a third world country and trying to progress Pakistan still faces the problem of
economic stability, recently it is believed that Pakistan has been able to maintain economic
stability.
Fiscal year 2002-03 has been frustrating for global economic recovery. However, the
following key macroeconomic events took place in 2002-03:
Real GDP at factor cost grew by 5.1% (target: 4.5%)
Contribution of manufacturing & services: 5.3%
Inflation (as measured by change in CPI) stood at 3.3%
Monetary policy showed expansionary stance by lowering the weighed average lending
rates from 14 to 8.2%
KSE has risen to the order of 5,000 pts
Sharp decline in public debt
Various tax reforms
Growth in exports: 20.8%
Lower income & daily wage earners go for sachets which has increased the share of sachet
up to 19% in the total brand split.
Demand for mini packs has increased in small towns and rural market
Economic conditions play a major impact on tea industry. Like most of the other industries
are dependant on economy, tea is also one of the industry that can be greatly effected by
economic instability.
Whether the economy is in a recession or in a boom, it affects the activities of Tea industry
in a way that it influences the demand of their product. In a boom the demand of the product
increases. Similarly, in a recession the demand of a product falls since the buyers consume
less of the product due to falling incomes. Though fluctuations in the demand do occur,
these are not major fluctuations as demand for tea is inelastic in relation to price.
Inflation plays a major role on the marketing strategies used by a company due to two main
reasons. Firstly, inflation affects the consumers' psychology and they become more
selective in their purchases. Secondly, inflation results in rising prices for the raw materials
purchased by Tea selling firms, which in turn increases the cost of production. This factor
plays a major role especially if the increase in cost cannot be transferred to the consumers
in the form of raised prices.
Task Environment
PESTEL ANALYSIS
:
PEST analysis is used to describe a framework for the analysis of macro
environment factors included:

Political

Economic

Social

Technological
Political Factors:
Political factors and government interventions can make or break the industry. The
political factors have played a very kind role for the tea industry. The political arena
has a huge influence upon the regulations of the businesses, and spending power of
consumers and other businesses. The political environment of Pakistan is relatively
unstable in the current situation. The investors are not willing to invest in Pakistan.
However, WTO and trade policies encourage the import of raw materials for Tea
industry.

Tea Import Quota

: It is an important consideration. Each year there is a certain quota on tea import in
total imports of Pakistan. Each player is given quota to import and manufacture so
one can say that it is a much regulated industry.

Diplomatic Relations
: The relations with the tea producing nations and Pakistan play a vital role as large
part of imports comes from Kenya, but now Pakistan is also importing tea from
India.

7 | Page

Unstable Geographic Conditions

: Pakistan is situated at a very critical and geographically strategic location. Due to
the uncertainty new investors are not ready to invest in Pakistan.
Economic factors:
Economic conditions of an environment have a direct impact on the development of
any industry. The
recent economic recession in the world has had an impact on Pakistans economy
as well. Pakistan's
economy mainly encompasses textiles, chemicals, food processing, agriculture and
other industries. In 2005, it was the third fastest growing economy in Asia. Since the
beginning of 2008, Pakistan's economic outlook has taken a dramatic downturn.

Inflation
: Inflation remains the biggest threat to the economy, jumping to more than 9% in
2005 before easing to 7.9% in 2006. The central bank is pursuing tighter monetary
policy while trying to preserve growth. Foreign exchange reserves are bolstered by
steady worker remittances, but a growing current account deficit - driven by a
widening trade gap as import growth outstrips export expansion - could draw down
reserves and dampen GDP growth in the medium term.
Social factors:
The social and cultural influences on business vary from country to country. It is
very important that such factors are considered. Tea has always been an integral
part of Pakistani culture and rituals. It is understood that tea would be present at all
events.


Changing Trends As work environment is becoming more stressful, people require

different forms of refreshment and intakes to increase their energy levels. This
further increase the intake of tea at workplaces, tea is not only just available to the
employees when needed but is also served twice a day in order to keep them going.
On the other hand, media expansion, growth of advertising as a separate industry
has resulted in greater exposure of all the brands and masses. Hence social factors
and changing mindsets have positively affected this industry. Tea has always been
acceptable in all social classes because of its usage. Green tea has recently gained
a lot of popularity due to health reasons and is largely consumed. Another factor is
the emergence of ice tea which is indirectly competing with soft drinks.

8 | Page
Technological factors:
Technology is important to gain an edge over competitors and it drives
globalization. Technology helps companies to reduce cost and achieve economies of
scale. Technology also leads to the development of new products and sometimes
even segments. Tea manufacturers like Unilever and Tapal already manufacture tea
of the highest quality and they achieve it by the state of the art production facility
that they have. Lipton has also installed its own plant of Danedar tea production
OPPORTUNITY:

High Potential In Terms Of Increasing Market Share:

LIPTON TEA Pvt. Ltd views the ever increasing market share as an opportunity for
LIPTON ICE TEA
. The product that is being offered by us is not readily available in terms of both
local brands that are available in the leading stores of these cities.

Higher degree of adaptability from the younger generation:

The youth of Pakistan in contrast to their precedents are more adaptable and
recipient towards new ideas. It is this adaptability of theirs that will prove to be an
opportunity for
LIPTON ICE TEA
. Lipton hopes that since our product is not only convenient but innovative and
apparently attractive as well, it will attract these youngsters as well as people in
their thirties through these features, who over all other things rate
convenience
and
quality
first.

Fill loop holes present in the competing products:

Appealing, high quality and consistency in taste are features that are over looked by
the competitors due to one reason or the other. Even if these features are present in
a few products they are highly priced and are not easily available in the market
because of being imported. Lipton, with the help of
LIPTON ICE TEA
, aims at filling these loop holes by providing variety, uniqueness and consistency in
taste all at a reasonable price.

Nutritional Product:

Page | 15
LIPTON ICE TEA
, in contrast to tea and other fruit drinks available in the market,
contains no artificial flavors or coloring. Apart from this its low caffeine content,
non- carbonated and presence of additional vitamins, calcium, carbohydrate and
iron contents make it an attractive alternative to the already present drinks in the
market. The novelty of our drink will attract the health conscious group of
consumers who are otherwise neglected.

THREATS:


Government Policies:
Government Policies like GST, which has been levied upon all consumer products,
poses as a threat to us as to fulfill this criterion and to cover our costs we have to
set our prices higher than we initially hoped for. Apart from this the discouraging
policies regarding the import of tealeaves is another threat for us.

Competitors Strategies And Polices

:
The very fact that
LIPTON ICE TEA
is competing against names like Tapal,Supreme,Tetly, Pepsi etc. poses to be a
threat for us.At this initial stage, though
LIPTON ICE TEA
will be substantiated with an adequate advertising budget, it may still fall short of
that of its competitors.

Unaccounted competition:
Another threat that
LIPTON ICE TEA
faces is competition in terms of smuggled products of the same product category
through the Black Market.

One of the major threats that

LIPTON ICE TEA
has is that how to use the ice tea due to the illiteracy in Pakistan.

If any NEW competitor will enter in the market.

As we are distributors if company increase their price or stop manufacturing the

product our business will lead to failure.

http://www.academia.edu/5010708/LIPTON_ICE_TEA_final_report1